#SECCryptoRoundtable Good afternoon and welcome to the Crypto Task Force’s inaugural roundtable, which will explore the complex legal issues involved in classifying crypto assets under the federal securities laws.

In the wake of the 2008 Financial Crisis, a person or group going by the name of Satoshi Nakamoto released a white paper describing a new peer-to-peer electronic cash system called Bitcoin that helped form an entirely new digitally native asset class.[1] Seventeen years later, market participants, lawyers, academics, policymakers, and regulators are still grappling with critical questions related to the status of these novel crypto assets under the federal securities laws.[2] This disagreement is most pronounced when it comes to application of the investment contract test established by the Supreme Court in its 1946 opinion in SEC v. W.J. Howey Co.[3] (known as the “Howey test”) to crypto assets.[4]

The challenges in applying Howey’s investment contract test are not unique to crypto. I have firsthand experience with it: as Chief Advisor to the California Corporations Commissioner, I argued before a California appellate court that the offering of a non-security certificate of deposit packaged with the separate receipt of a bonus payment constituted an investment contract.[5] Although the state court concluded that it was not,[6] other federal appellate courts have held that similar arrangements satisfy the Howey test.[7]